Doug Casey: On America's Problems

Doug Casey, Casey Research
America, which is basically an idea, a concept, is dead and gone. The United States is just another of 200 awful little nation-states that have spread across the face of the earth like a skin disease. There’s no longer any difference that I can tell between the U.S. and any other country.

There is no real haven for freedom in the world today. The best you can do is go where the governments are so unorganized that they can’t control you effectively. That’s one reason I like to spend time in Argentina. They have an incredibly stupid government, but they’re also very inefficient and ineffective. So it’s wonderful as a place to live. I also spend time in Uruguay, because it’s a tiny little country with no ambitions to conquer the world. The nice thing about New Zealand, where I am now, is that it’s a small country, only 4 million people, lots of open land. It’s got some severe problems, but it’s pleasant. I think the U.S. is going to be the epicenter of a lot of problems in the years to come.

...Europe is going to be hurt much worse than the U.S. Europeans are much more heavily taxed and much more heavily regulated. The average European is much more reliant upon the state psychologically as well as economically. So it’s all over for Europe and this doesn’t even count the problems that they’re going to have in the continuing war against Islam, which are much more serious for Europe than they are for the U.S. So Europe is fated to be nothing but a source of houseboys and maids for the Chinese in the next generation.

Bankrupting of America

If you think the current mortgage-related sub-prime meltdown has been bad, you haven't seen anything yet. The current state of the federal government's finances looks suspiciously like the mortgage sub-prime mess. We need to learn from the lessons of the smaller crisis in order to prevent an even bigger one. First, the mortgage-related sub-prime problem was caused in part by a disconnect between those who benefited from issuing the loans and those who bore the risk. The same situation exists with the federal government's finances. Today's taxpayers benefit from our current high-spend, low-tax, "mortgage the future" practices. Tomorrow's taxpayers will pay the price and bear the burden. Second, mortgage sub-prime was facilitated by a lack of transparency about the related risks, both in connection with home borrowers and with investors in mortgage-backed securities. This is also the case with the federal government's finances. The government is in a roughly $56,400,000,000,000 financial hole that is growing by $2 trillion to $3 trillion every year nothing is done to address it. These are just two of the disturbing statistics in "The State of the Union's Finances", a publication by the nonpartisan Peter G. Peterson Foundation, which can be found at www.pgpf.org. Third, Bear Stearns found out the hard way what price you can pay when you lose the confidence of your lenders and wind up in an escalating negative cash-flow position. Investors in mortgage-backed securities also found out that a AAA rating doesn't mean what it used to. The federal government is already experiencing a negative cash flow for Medicare, and Social Security will go negative within a decade. These negative cash flows will pick up dramatically when "baby boomers" retire in big numbers. Finally, with mortgage sub-prime, corporate and government risk-management devices failed to kick in and prevent a crisis. Today, too many elected officials are standing by and doing nothing to defuse the ticking time bomb associated with our government's finances. What are they waiting for--a crisis? When will Washington see the writing on the wall and start taking steps to reverse our deteriorating financial condition? Will our next President have the courage to talk straight and make tough choices in order to ensure that our collective future is better than our past? We can't afford to wait until this super sub-prime challenge boils into a crisis that will result in severe hardship for tens of millions of Americans. Hopefully, we'll get some real leadership on this issue soon.

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